Types of Trade Blocs-Customs union

A customs union is a trading bloc consisting of a free trade area with a common external tariff. It is the third stage of economic integration. The members of a customs union make agreements to reduce or eliminate trade barriers among themselves and establish a common external trade policy. Through the elimination of trade barriers between member states and a common external trade policy, the members become a unified entity in the eyes of international trading partners. Generally, there are no restrictions or quotas on the movement of goods between the members of a customs union, creating a "customs union" with unified trade policies for all members. Examples of customs unions include the European Economic Community, the Latin American Integration Association, and the Caribbean Community.